That dynamic was driven by a politics of mutual fears, where both of the major parties remained in the shadow of their most recent election defeats, as I argued in my Fabian pamphlet 'The Vision Thing' (full text, PDF file).

This is the central paradox of British politics. Even after a decade in power Labour fears this is an essentially conservative country, where the centre-left are interlopers in power, while it is the Tory leadership which knows that the reality is that of a social democratic Britain, to which they must persuade their party to adapt. This is because both parties remain haunted by their most recent election defeats. The Conservatives do not want to lose again on ‘investment versus cuts’ as in 2001 and 2005, yet the shadow of 1992 still haunts Labour.

As the two parties shadow box over the centre-ground, nobody is quite sure where ‘the new centre’ of British politics will end up. Hence the political cross-dressing as David Cameron claims to be ‘heir to Blair’ while Gordon Brown seeks tactical advantage in paying tribute to the Thatcher legacy which the New Tories discard. On public services and spending, social democrats have set the agenda. On crime and immigration, the right calls the shots

Resisting his party's clamour for tax and spending cuts was to be David Cameron's "clause four" moment.

Gordon Brown will again want to campaign on a favourite election theme – the choice between ‘public investment’ and ‘cuts’. That sent Oliver Letwin scurrying into hiding in 2001 and saw Howard Flight defenestrated by his leader in 2005 simply for expressing what every Tory believes: that the state should be smaller. David Cameron and George Osborne are torn: they share that belief, yet are desperate not to fight the same campaign again. Hence their tactical decision to accept Labour’s spending plans. But they are struggling to hold the line against an emboldened right-wing argues that ‘tax cuts work’, following their own inheritance tax coup.

So it is difficult to understimate how significant a change of political strategy last week's u-turn has been.

But it does mean that the Conservatives can probably make considerable savings on the cost of their next general election campaign.